AUD/USD struggles to get over the line after NFP/ECB turnaround in dollar sentiment

Currently, AUD/USD is trading at 0.7978, up 0.40% on the day, having posted a daily high at 0.7996 and low at 0.7922.

US: Total nonfarm payroll employment increased by 156,000 in August

AUD/USD has rallied up to test the 0.80 handle, but the follow through in dollar selling was not enough to get the pair across the line and profit taking has ensued on the initial rally. The bears were helped along with an announcement at the same time from the ECB that they will not be ready to change their stance until December, which was essentially a green light to buy back the greenback.

ECB reportedly sees chance that QE plan won't be ‘fully ready’ until Dec - BBG

Nonfarm payrolls arrived at +156k in August, private +165k, both well below expectations. The unemployment rate was +0.1 to 4.4% and the participation rate was unchanged at 62.9%. There was a -41k net revision to June-July payrolls. Overall, this was a weak report and the dollar is sold off across the board. One of the key components within the report that will be scrutinized was average hourly earnings. While missing expectations, these were not a million miles away, although the prior was revised in a substantial way. 

• Average hourly earnings +0.1% vs +0.2% m/m expected
• Prior average hourly earnings +0.3% (revised to +0.1%)
• Average hourly earnings 2.5% vs +2.6% y/y expected
• Average weekly hours 34.4 vs 34.5 expected

"One of the few bright spots was manufacturing, which added 36k jobs.  This is the most since August 2013," explained analysts at Brown Brothers Harriman, adding, "The July manufacturing payrolls were revised to 26k from 16k."  

Elsewhere, China's Caixin manufacturing PMI ticked to 51.6 from 51.1, confirming the improvement seen in the official measure.  "The resilience of China's economy is one of this year's pleasant surprises.  The years high was set at 51.7 in February, just below the cyclical peak last December at 51.9.  The yuan is up 1.2% on the week and trading at its strongest level in a year," explained analysts at Brown Brothers Harriman. 

AUD/USD levels

We are at the 0.7980/91 July 20 and August 4 highs that guard the 0.8065 recent high. "Above the 0.8065 level the 0.8162/66 May 2015 peak and 50% retracement can be seen. Above there lies the 0.8295 January 2015 high," noted analysts at Commerzbank. To the downside, the uptrend lies the 0.7808 current August low, which guards good support at 0.7748/41, argued the strategists, explaining, "it is where the February and March highs are located and while above here the market will remain bid."